The U.S. Department of Labor recently announced a new rule, set to take effect on March 11, which introduces a “multistep economic factors” test for determining whether a worker should be classified as an independent contractor or an employee. This development has stirred concerns within the transportation industry, particularly among independent truck drivers, as it adds a layer of regulatory oversight that could reshape their business model.
According to the American Trucking Associations President, Chris Spear, the trucking industry has a long history of utilizing independent contractors, and court decisions over the years have recognized their legitimate role in the economy. However, the new rule has been met with criticism, with Spear stating that it replaces a clear and straightforward standard with a complex framework that could weaken the supply chain and impact the livelihoods of truckers across the country.
The rule directs employers to consider six criteria when determining a worker’s classification, without giving precedence to one over the others. These criteria include factors such as opportunity for profit or loss, investments by the worker and potential employer, degree of permanence of the work relationship, nature and degree of control, the work’s integral part in the employer’s business, and skill and initiative.
The Department of Labor justifies the rule change by rescinding a 2021 rule and modifying Wage and Hour Division regulations, claiming that the new regulation aligns better with judicial precedent under the Fair Labor Standards Act. The final rule provides guidance on how the six economic reality factors should be considered, while also allowing for additional factors relevant to the overall question of economic dependence.
Opposition from the business community is expected, with groups like the U.S. Chamber of Commerce considering legal action. Concerns have been raised about certain aspects of the rule, such as the consideration of contractual rights to control or supervise as indicative of employee status, even if not exercised in practice.
Despite some incremental positive changes in response to comments, the final rule reverts to a totality-of-the-circumstances analysis, where factors do not have predetermined weights and are considered in view of the economic reality of the entire activity. The rule also provides a broader discussion of how scheduling, remote supervision, price setting, and the ability to work for others should be considered under the control factor.
As the March 11 implementation date approaches, the impact of this new Department of Labor rule on independent truck drivers remains a topic of concern and scrutiny within the transportation industry.
